Coal powers Queensland and its electricity is the cheapest in the nation. Wind and solar power South Australia, and its power is the most expensive in the world.

Australia’s energy Minister, Josh Frydenberg is either deluded or lying, when he says that power prices are already on a steady descent.

Power costs to business have jumped 28% in 12 months in the ACT (with its 90% renewable energy target) and between 20 to 24% in those states with major wind and solar capacity (NSW, VIC and SA).

Victoria shut its 1,600 MW coal-fired Hazelwood plant and saw retail prices jump. Queensland retains its coal-fired fleet and watched prices drop by 5%. The graphic above doesn’t take into account the changes over the last 12 months depicted below. An updated version will show Victoria and QLD trading places.

Frydenberg’s National Energy Guarantee will do nothing to amend the northward trajectory of Australian power prices. To the contrary, the emissions obligation integral to the NEG will guarantee rocketing power prices, from now until kingdom come.

When the NEG was first mooted, retailers would have been able to meet the emissions obligation by purchasing international and/or Australian carbon credits, for around $8 to $10 a pop. Instead of purchasing Renewable Energy Certificates from wind and solar generators at $85 a pop.

Frydenberg’s NEG has scrapped the idea of satisfying the emissions obligation using cheap and cheerful carbon credits, mandating the purchase of even more unreliable and intermittent wind and solar.

Renewable energy rent-seekers camped out in Frydenberg’s office, hijacked the drafting of the NEG, and turned it into the RET on steroids.

Beyond the immediate financial cost attached to the NEG, there’s the impact on reliable power generators, already besieged by subsidised wind and solar.

Here’s Tom Quirk detailing the inevitable destruction of what’s left of Australia’s reliable power generation fleet, should Frydenberg’s NEG ever get off the ground.

NEG – The white elephant in the room
Watts Up With That?
Tom Quirk
26 June 2018

When the King of Siam wished to rid himself of a troublesome courtier, he would send a white elephant as a first sign of oncoming ruin. Our federal government has served up a troublesome elephant of a plan, the NEG (National Energy Guarantee) that might ruin our country.

The information used in this analysis is sourced from the Department of the Environment and Energy, Australian Energy Statistics, and gives the sources of electricity generation for the calendar year 2017. The generation plant data comes from the AEMO.

This note will explore what could happen were one of the key conditions of the NEG was actually met – the condition that CO2 emissions from electricity generation should move to average 0.4 tonnes of CO2 per megawatt hour of electrical energy.

South Australia has already achieved this NEG goal but at great cost to consumers whether domestic or business.

The table below lays out the mix of generators. Coal fired generation has ceased, wind farm energy takes priority in the market and the inter-connectors to the Victorian power system keeps South Australia from having too many blackouts by supplying some 15% of demand.

Renewables meet 37% of demand while Victoria supplies 15% and the NEG target is achieved with an average of 0.38 tonnes CO2 per MWh.

South Australia Electricity Generation 2017

Generation
GWh %

Plant
MW

Utilis-ation

Tonnes CO2/MWh

Non-renewable fuels

Black coal

Brown coal

Natural gas

7,699

47%

2,853

31%

0.48*

Oil products

110

1%

1

Total non-renewable

7,809

48%

Renewable fuels

Biomass

92

1%

0

Wind

4,803

29%

1,810

30%

0

Hydro

3

0%

0

Large-scale solar PV

5

0%

0

Small-scale solar PV

1,091

7%

0

Geothermal

0%

0

Total renewable

5,995

37%

Total generated in SA

13,804

85%

0.27

Interconnects to SA

2,600

15%

0.95

Total consumption SA

16,404

100%

0.38

* Weighted average for CCGT, OCGT and thermal gas plants

So turning to the other states, New South Wales, Queensland, Tasmania and Victoria that are in the National Energy Market, the table below is for the same period as the South Australian analysis above.

In these states renewables generate 15% of supply with half coming from hydro plants. Coal and gas provide 85% of supply and the CO2 emissions average of 0.89 tonnes CO2 per MWh is well above the NEG target of 0.4 tonnes CO2 per MWh.

NSW, Qld, Tas and Vic Electricity Generation 2017

Generation
GWh %

Plant
MW

Utilis-ation

Tonnes
CO2/MWh

Non-renewable fuels

Black coal

109,890

54%

18,286

69%

1

Brown coal **

38,313

19%

5,285

83%

1.5

Natural gas

22,372

11%

8,759

29%

0.48*

Oil products

2,137

1%

1

Total non-renewable

172,712

85%

Renewable fuels

Biomass

3,351

2%

0

Wind

6,337

3%

2,656

27%

0

Hydro

13,711

7%

7,939

20%

0

Large-scale solar PV

708

0%

0

Small-scale solar PV

5,852

3%

0

Geothermal

1

0%

0

Total renewable

29,960

15%

Total generation

202,672

100%

0.89

* Weighted average for CCGT, OCGT and thermal gas plants

** Hazelwood operated for 3 months of 2017

So what might happen if this same energy were to be generated under the NEG target of 0.4 tonnes CO2 per MWh?

The final table shows what changes to generator plant might be made up to 2030 to reach the NEG emission target while generating the same energy as in 2017.

NSW, Qld, Tas and Vic Electricity Generation 2030 with NEG target

Generation
GWh %

Plant
MW

Utilis-ation

Tonnes
CO2/MWh

Non-renewable fuels

Black coal

17,938

9%

3,000

68%

1

Brown coal

7,300

3%

1,000

83%

1.5

Natural gas

120,000

59%

40,000

34%

0.48

Oil products

2,137

1%

1

Total non-renewable

147,374

73%

Renewable fuels

Biomass

3,545

2%

0

Wind

24,000

12%

10,058

27%

0

Hydro

20,000

10%

10,000

23%

0

Large-scale solar PV

761

0%

0

Small-scale solar PV

6,991

3%

0

Geothermal

1

0%

0

Total renewable

55,297

27%

Total generation

202,672

100%

0.43

A comparison of the present and the desired outcome points to the following

1,000 MW of brown coal burning power station (Loy Yang B) remains in Victoria. As a base load power station it will only supply 25% of the steady 4,000 MW demand during the early morning hours in Victoria.

Natural gas usage has increased six-fold with a four-fold increase in plant. Generators are no longer simply meeting demand changes in periods of high demand but are having to meet sudden changes from intermittent supply sources. How the extra gas will be sought is a mystery with governments stopping the search for new gas sources. Perhaps LNG will be shipped from Queensland or Western Australia.

Wind farms have increased from 2,600 to 10,000 MW. The Victorian government wants to add 4,000 MW of wind farm. This is sufficient to destroy the high utilisation necessary for baseload generation. Other states may be just as ambitious. The southern states of New South Wales, South Australia, Tasmania and Victoria all share common weather patterns so there will be periods where correlated wind farm generation will fall towards zero. This has already been seen. No allowance for backup supply has been considered in this analysis but new inter-connections will not be much help balancing coherent wind power variations.

Hydro has been increased assuming “Snow you too” is built. This scheme, like batteries in South Australia, depends on buying low and selling high where you must buy 20% more energy than you sell. If there is little baseload pricing in the wholesale market this may be an NBN-like venture as the operating surplus will have to meet financing costs.

Small scale solar photo voltaic systems are a completely uncontrollable source of demand variation. Encouraged by direct state grants this has been a religious indulgence for the better-off.

No attempt has been made to estimate the costs for these changes or the prices consumers would pay. But if South Australia is setting an example then the prices will be amongst the highest in the world. The consequence will be smelters closing and other energy intensive processes moving elsewhere in the world.

The conclusion from this analysis is that the political and policy-making class have taken us and the white elephant into a labyrinth of regulations that will further disrupt electricity supply. Whether we meet the Minotaur or the elephant, like Theseus has a piece of string to help us escape remains to be seen.Watts Up With That?